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Charts I’m Watching: Jan 8, 2015

I guess we’ll call this one the Evans Rally (as opposed to October’s Bullard Rally and December’s Yellen Rally. Last night, Charles Evans told reporters that “raising rates would be a catastrophe” and hinted that the first rate rise wouldn’t come until 2016 or later.

This came barely 6 hours after the Fed’s minutes were released — the same minutes that pointed an accusatory finger at the ECB and BOJ for talking up markets:

In their discussion of financial market developments, participants observed that movements in asset prices over the intermeeting period appeared to have been importantly influenced by concerns about prospects for foreign economic growth and by associated expectations of monetary policy actions in Europe and Japan.

Oh, well; it ties a nice, pretty bow on our forecast. Yesterday’s call was for a backtest of the rising wedge lower bound. From the members’ section:

The biggest obstacle will be that white TL off the October lows. Originally support for a potential rising wedge, it is now resistance. I show it at around 2020-2022, which would mean a pop and drop this morning. If SPX is able to clear it, then it should be good for a return to test the SMA50 and/or SMA20 at 2041/2044. Otherwise, our downside targets start to look more interesting.

So far, SPX is following that script pretty closely. The original backtest was at 2024 (in white, below), a smidge over our target, whereupon SPX tumbled to 2012 before being rescued by USDJPY.

This morning’s surge looks likely to reach the SMA20 and/or SMA50 (in yellow) with the next major upside resistance the purple channel midline where it intersects the purple .618 and SMA10 at 2057ish.

But, there’s a development that could undermine that thesis quite easily.